city dwellers from getting a coveted benefits of exercise. i am very suspicious. i have my doubts about this one, what do youuthink? you're very fft. >> i run in the city all the time, hav have to show you the handbag i got, people told me it was a dumb thing. it is not a dumb thing, is it? >> i love it. you're going to steal that now? we will see you tomorrow. "the willis report" is coming up next. >> tonight the sec thinks the time to get rid of ccll phone bans on flights. will the airlines agree? and despite the fiscal cliff, there are many positives heading into 2013. we will tell you what the biggest one is. welcome to "the willis report."

hey, everyone, i am tracy byrnes in for gerri willis. the only have 21 days separate in the u.s. for more than $500 billion in tax hikes. while both sides say the lines of communication are open. getting a deal to avert the fiscal cliff, president made it very clear he is holding the line on hiking taxes on the top 2% of earners. customizing a little bit with republicans. joining us, peter barnes. what exactly is he willing to compromise on? >> on the big item, the big kahuna. increasing taxes on families earning more than $250,000 per year history leaving the door open to a compromise on higher tax rates, higher rates. when anas repea asked repeatedls demanding the top rates return to the clinton administration in

and the top rate was 39.6, he does not say yes, have to have that to get a deal. but he is not backing off his demands rates go up by some amount of wealthier families so the buzz is he might settle or compromise for something in between like 37%. there is speculation the president might compromise on the cut off my degree and a higher threshold by 500,000 per year before higher rates would kick in. in a speech in detroit the president extended a little olive branch republicans. >> i have said i would work with republicans on a plan for economic growth, jobs creation and reducing our deficits. and have some compromise between democrats and republicans, i understand people have a lot of different views, i'm willing to compromise a little bit. >> the president met with

speaker john boehner yesterday. not discussing any details of the conversations, just saying as you said at the top, lines of communications are open. also talking to senate majority leader harry reid today as well. everybody is talking but we don't have a deal yet. tracy: is anybody talking about spending or entitlements, peter? >> they're making it pretty clear. one statement we got from speaker john boehner's office today was that the republicans continue to wait for the president to make specific proposals for cutting spending.3 that is what they want. tracy: we don't sound any closer to me, but again i am skeptical. down in d.c. >> great, thanks. traay: the president is going to @ompromise as peter just said. what are republicans willing to compromise on. we have got to ask mike lee of

utah. i am sorry i am so skeptical. 58% of americans don't think we will reach a deal. where do you feel about this right now? >> it is difficult to predict at this point. i don't think anybody wan wantso go off a cliff except the president. he might not only allow it to go there, but perhaps push us off has manifested last week by the decision to drop kick john boehner's offer. the tentative proposal before reviewing it. without even offering a counter proposal. it is difficult to predict at this point. we don't want that to happen americans don't deserve to have that. tracy: it seems to me the conversation from senate democrats and house republicans. the senate republicans seem to be getting lost in the shuffle here. >> certainly isn't an ideal method of developing pollcy behind closed doors with a few

people involved, it is troubling to a lot of my constituents. tracy: what do you think about what republican senator said yesterday. actually have a sound bite we should take a listen. saying taxes should go up. take a listen. tracy: a lot of people are putting forth a theory i think it has merit where you give the president the 2% increase he is talking about on the top 2% and all of a sudden the shift goes back entitlement. tracy: so what do you think about that? almost like we will give you the 2%%but you have to give us the entitlements, that just never seems to work. >> i disagree with that approach. i don't think we ought to be raising taxes right now. the reason we say that it's not because we're worried about the rich, we're worried about what tax increases to the rich will do for hardware americans. those ar people among the 700,00 who would lose their jobs even if we raise taxes only on the 2%.

tracy: is there anything you're willing to come to the middle on? >> we can come to the middle where the democrat from illinois said a few months ago we ought to extend the current rate perhaps a year or so we can come to the table and unnertake a comprehensive tax reform effort, one that is designed tt reform and simplify our existing buddy holly era tax code that occupies tens of thousands of pages now but has ever read. tracy: it is one big book of favors. others on the line for so many americans in particular alternative minimum tax ttat could affect 33 million taxpayers. we have not heard a word about that. ooher discussions of that or any other extenders like the r&d credit, those are all on the table set to expire. speaker yes. those and countless other tax issues on the table set to

expire, those are things that are going to hurt hard-working americans. we have to stay focused on the fact this is not about worrying about the rich. this is about protecting hard-working americans who stand to face job losses and diminished wages if the tax increases take effect. tracy: the problem for a lot of people at home, this is what we seem to be really good at, we can kick the can down the road like pele. we are good at this, but the fiscal cliff conversation coming up in june and a year from now if we do extend, we will be having this conversation all over again. when does it get done? >> i'm not talking about kicking the can as it relates to spending, but i am with taxes. they are different and it does relate to the fact we have a tax code so bloated, so distorted, so complex it produces inconsistent revenue stream. 18.5% of gdp is what it produces on average.

it remains relatively constant regardless of your topper to 70% by three decades ago or 35% as it is now. what we want and what we need is a tax code with a study, stable stream of somewhere in that neighborhood. something stable and consistent. tracy: before let you go, senator, are we going over the cliff? >> it is too early to tell, can't make that prediction. i've learned not to make such predictions in this town, it only gets you in trouble. tracy: only 21 days, it can't be too early. thank you for taking the time with us. >> thank you. tracy: early? i don't know. a lot more to come including the future tax reform. we actuallcan we actually get am that makes sense? if we don't go over the fiscal cliff is an even bigger recovery on the way?

our next guest says yes. and yet housing to thank for it. after the break.

tracy: prices on the rise over the last six months and homebuilder confidence of the highest level in six and a half years. many believe there is some sort of a housing rebound in the works, believe it or not. our next guest says the key driver boosting the economy next year will be a housing recovery. he could explain, charles schwab chief investment strategist. i'm glad you ar you're here bece you're a breath of russian air. optimism. you think 2013 actually could be okay. >> i think it could be okay. not excellent.

the mortgage deduction pieces per the fiscal cliff could throw a short-term wrinkle in there. domestic energy is a huge boom in the economy right now. there are some bright spots. the problem is to add them all up and it still does not come anywhere near what the consumer represents in the economy. i don't think it will be a drag on the economy for the ongoing deleveraging still necessary, income growthhfairly weak relatively slow job recovery, that these of the economy is still likely to be slow growth mode. tracy: a fiscal cliff is a drag on confidence whether you understand the implications of it or not, just hearing it is enough to make you want to hide under your pillow, right? what is your thought on this? consumers have not so much been whistling past the graveyard on the issue, only more recently, to the realization of what this

could possibly mean for them ant also some positive to focus on which his housing and gasoline prices. businesses have been dealing with the uncertainty factor for many months now. the only potential good news is we might have front end loaded the business side with capital spending. that could mean a quilt spring into 2013. tracy: u.s. companies are leaner and meaner thannthey have been probably in my lifetime but there is this looming fiscal cliff. do you think we will get a deal before the end of the year? >> i have absolutely no idea. there is low hanging fruit. strongly both sides do not want to see the other 30 some million people as married under it. there could be so low hanging fruit. they coulwe could get some sortf compromise on the bush tax cuts, but there is a two-stage process and we are only focused on the

first stage representing the deadline just getting some sort of a deal. the extent we get one, there is a breath of relief and then we start to look at the details of whatever the deal is in the implications for the economy for the market and corporate earnings and all those things. i think we're not quite at that stage yet. tracy: we have a meeting on wednesday, we will hear results of q4, more stimulus, what do you expect to hear? >> operation twist, the fed selling some of the dated securities to buy longer dated securities to bring long-term interest rates down expires at the year-end. they want to bring more stimulus in the picture, not letting it expire which would in essence be a drag. it is really not relevant, but likely add out right treasury purchases to the mortgage-backed securities they are purchasing under qe three. a provision of additional

liquidity. tracy: will it be necessary? the law of diminishing returns. or not getting the bang for our buck like we used to get. tracy: clearly not. clearly the stock market is the gauge of the success of quantitative easing. more than the first couple of rounds and happe in the happen k the big boost housing is because prices are starting to increase not as much on the mortgage side. we have record low mortgage rates with prices going up and that is the double incentive for homebuyers. you could argue that is more at play than what the fed has done. the fed will do something is to ultimately if we look back and said that was the elixir for the -@economy, less sure about that. tracy: that to get people out on the weekend looking at homes again. >> the chairman of our firm, that has been in view he has

expressed fairly publicll certainly long-term unintended consequences keeping interest rates down so low. they have promised they will keep rates low until 2015, what is the rush. muscle to this thread with the right financial institution, why go out if my competitors are not doing it. there isn't the fire under me. i don't think it is the consensus view but i have the sympathy for that. tracy: for the bank, what i want to lock in interest rates for 30 years at these low rates. everybody waiting to see what will happen. we are hoping housing will pull us out of this malaise and we did a little action on that end. >> let's remember housing can only do so much. how they represented about 6.5% of gdp. it is only about two and .5% of gdp right now. although i think it will be a

nice positive driver that has been for five or six quarters now, it doesn't have quite the impact it did a few years ago. tracy: were so great, thank you. >> than thank you for having me. tracy: the names most often used with talk about the housing crisis, believe it or not, you know him, fannie mae and freddie mac. making headlines again, so let's gegive you a refresher in two companies. then mae $116 billion from taxpayers. to be fair to pay some of that back. but they still owe nearly 88 early in dollars. freddie mac is not doing much better getting $71 billion going for $9 billion. they owe you and me more than $137 billion. but wait, here is some news. the federal housing finance agency near the 2010 and 30

employees are taking home a paycheck for the median pay is more than $2000. actually won six of the workforce, $200,000. what am i talking about. won six of the workforce not including senior executives like ceos making around $600,000 each year. it does include more than 300 vice presidents with a median pay of nearly $400,000 per year. i'm not saying people should be working for free but when you're asking taxpayers to bail you o out, time and time again they keep doing this you need to do a little cutting at the margins, the don't you think? fannie and freddie were not passed to take money from tarp but they ask for help almost every quarter. you want help, go get an accountant. if they can show you how you'rer overspending on your celery stick and a big shout out to

treasury, don't give them another dime until they figure out how to do that. if you are fired up about this or any other issues on the program, drop us an e-mail. >> coming up on "the willis report," is it possible for our do-nothing congress to ease up on the tax code? senior vice policy analyst weighing in on all this and more next. and president obama touring michigan debate is the home of the powerful unions could soon become the 24th right to work state. what role if any will obama play in the fight? you and alec baldwin aren't the only ones who get upset on a plane when it comes to turning off your cell phone. a new battle underway. we're on the case next on "the willis report." so now i can bin the scene. advair isclinicallyp

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tracy: the tax man is coming back with a vengeance. in 2013 regardless if we drive off the fiscal cliff or not. it is force the nation's hardest workers believe it or not cough up more dough. the country's wealthiest put uncle sam competence forever. joining us now. the government made all his mistakes, so the really wealthy people can pay for it all. speak the whole point is it can fit the bill. we'll add $10 trillion of debt, doesn't obama taught no tax increases. we're talking cover the debt

over that time. it is not enough to prevent a debt crisis down the line. tracy: we have seen it time and time again. thougthe ability to wealth if yu have access to important people. they don't have to pay taxes after all. >> people don't work as hard as ithey otherwise would have, dont take risks so don't get the growth have not raised taxes. i think that's what would happen if we went with president obama's plan. they come it will not grow as fast as it would have. speetracy: inevitably our taxesl go up because the wealthy do not pay as much as they thought. >> there's not enough revenue at the top to fit the bill. they still need to get back to where they get is coming from, spending on entitlement programs as social security and medicare.

tracy: we spent $270 billionn3 from 21,022,014 on this credit, how come we don't talk about that? >> there's a bipartisan agreement that they like income tax credit, it is one oo the better programs so they have an agreement but we will not go there as a way to have tax reform, probably better for them. tracy: let's talk about tax reform in general, are we ever going to see this? the only way to do it is to jump the book and start all over. >> we have been pushing for that for a long while now, but will not happen. president obama is talking about basically how tax reform would raise taxes on the middle class going back to the campaign for tax plan would raise the taxes. it is not going to happen. we have liberals like "the new york times" rally around certain tax form saying

no and will not touch that. they did not want tax reform come it will not happen. tracy: we have not heard a word about that coming up in 21 days. >> busy expiration on the payroll tax cut, all of those extenders, this is all coming to a head. there's a lot of progress in washington right now, so at best talking with dealing with the bush era policies and the rest is pushed even further into 2013. tracy: even the extenders probably will get punted for a year or extended for a year. so here we are again this time next year we wwll have the same conversation.

>> that is just how it goes forward. we have to accep accepted is goe done. tracy: the only way to do this is to throw the book out and start over. republicans offered it to them three times. offered it to them last week and turned it down flat. not interested forming the tax. i think we're in perilous times and we're down to the wire. now's th is the time to put the legislation together. tracy: iris has to implement it and it is very scary. still to come, should you be able to use your cell phone on a flight? we will have a debate over that. aad president obama asking for

his support for his fiscal cliff plan. also into the middle of a union3 what does he have to say about michigan becoming a right to work state? find out next. [ male announcer ] is is the age of knowing what you're made of.

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many analysts are still blaming the effects of hurricane sandy. both surveys are saying prices will fall even further by the end of the year. merry christmas. michigan, that earth place of unions might be a work to write state as early as tomorrow. when the governor is set to sign a newly passed legislation. not stopping president obama from weighing in. slamming the bill as they give workers the right to work less money. more on this, thank you for being with us. this goes bac back to the tax hy act. states have a right to do this, right? it seems really odd to me the president is getting involved at the state level like this.

>> you're absolutely right. one thing that should be noted out this mission becomes the 24th right to work state, over the last decade right-to-work states have seen a net increase of 3.6 million jobs. union states have seen a net decrease of 1 million jobs. this is a good thing, the voters voted for this when they knocked down a proposition on the ballot in 2012 essentially trying to enshrine union rights with the state constitution. that is what they want to do. tracy: as a business while they come to a state that is union? why would i want to deal with those expenses on my balance sheet or my income? >> does not allow for you to run efficiently. we saw this with gm and recently we saw one thing you really should shock some people is in

2010 there were 13 sort of chrysler workers who were fired for using alcohol and marijuana on the job making cars. two years later all 13 of them got their jobs back basically because of union backed arbitration and let them go back to work. union rules to not make a very efficient and what everybody is looking to do is basically to ban the automatic deductions from payrolls going to union fees for those who don't join union workers. they're trying to be very pro-worker. tracy: let's face it. i don't want to be forced at work, don't want to feel as a worker so it is good for me too. it feels almost odd entire south is still union where you get your northeast states all rights to work. why is there such a division? >> i really can't tell you, but it's postmarked the mentality the workers should be freed to make their own decisions.

while republicans can push the bill through. obviously the unions and the uaw are crying uncle, but the time has come. tracy: union membership is falling precipitously. now you have political donations being the only reason the president is in this state backing this because otherwise there is not that many union workers left out there. >> that is absolutely right. they have been the craft for the politicians to keep this scheme going and if you can take those who want the unions are not want their dues to be deducted it is going to crumble because your cutting the head off the snake. tracy: thank you very much. i wanted to bring you the latest developments on a story we have been following for like a year and a half now give the former international monetary fund

chief dominic strauss khan have settled a lawsuit over sexual assault allegations in a new york courtroom today. the settlement is being kept confidential. aren't you dying to know how much she got? stemming from a may 2010 encounter that has been accusing dominic strauss khan of trying toorape her. criminal charges were dropped after prosecutors had said the maid had credibility problems. i'm sure she still has some. dying to know. when we come back, and the beer taxes and many moves. and are you sick of being told to put your phone away while you're on a flight? that may all change, but should it? and find out what you think. we're coming right back.

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tracy: member alec olin's tantrum over flight rules? he got kicked off a plane for playing words with friends for being told to turn off all of the electronic devices. his outrage lives on after calling for major overhaul of the faa rules telling him t theo get with the times already. for more on this, executive vice president of the coalition of airline pilots association and founder of airfare watchdog.com join us now. captain, i will start with you first. seems to me the fcc chairman was on a flight one day, missed the call and was likely have to change these rules otherwise would have taken themmso long? >> all else, how could we get a

situatiin i that washington without something like that. tracy: why now? what have their phones on for years now, i always forget to turn mine down when they tell me to, the plane never crashes. >> ultimately we know this is a replacement has been around for a while, clearly the faa is looking at, sec is interested in but there i there's a process i. better take this process in almost every approval making them begin to look at whether there's a new rule from scratch or is it modification. the rulemaking process is now in play. announced they were forming an industry stakeholder group to look at the issue and those have historically taken times in seeing this done quickly, would caution people not get too far front of themselves because i would say we are in for a bit of time before we see it happen in earnest.

tracy: there's allegedly said about somebody stuck with somebody they cannot stand. >> do you want to be woken up by my cell phone ring tone it, let me play it for you. at 2:00 in the morning on our flight? i think there will be fights on planes. already fights over the overhead bin space. people spilling onto other peeple seek some measure which would be like when people are shouting over the roar of jet engines saying can you hear me now. bad enough on the ground, i think we will end up in handcuffs. tracy: this is where we are today.

you don't put your phone down, you can miss a call, doing business, business moves so fast to be on a five hour flight and have no contact with the outside world seems almost r. barrett. >> has become part of the function of our daily living we had to be in touch electronically whether it is a cell phone or some other electronic device we're used to having them with us 24/7. that being said in this particular realm ith flight safety initiative pastor safety we have to move in a deliberate way and that is what they are made to do. unsuccessful happen at some point, but when we do it is done so irresponsible with no unintended consequences. tracy: i agree. truth be told it does not actually affect the plan or the flight were the pilot, we have

sort of been lied to all long, haven't we? >> as he said, people forget to shut off their phones and there have not been any crashes. it is probably not a safety issue. i do wonder if we are giving terrorism another tool. the flight tracking is delayed by five minutes because of rules for security. i'm not sure the security concerns are, but only giving potential terrorist another tool for safety reasons on the plane? real-time gps tracking they can communicate now with people on the ground. i may be completely off base, but i'm worried about that. the technology is going to change. with the current technology is safe but will we monitor technology in the future if phones become more?

>> it is a fair debate. thank you, but i think the captain is onto something, we will eventually be listening to my fiancé ring tone on the flight. sorry. thank you both. we want to know what you think about all this. here is our question tonight, she passengers are allowed to use their cell phones on flights? who will share the results with you at the end of the show. besides the annoyance of people talking next to you, some airlines allow you to set in the lap of luxury. airlines make of the worlds best according to travel and leisure magazine making up sites top five. number five, pacific airways. the hong kong-based airways has power outlets and usb cords and the seats are really, really comfortable.

green air, most improved from last year thanks to hold the menu. featuring dishes from all over asia. number three, the emirates. slipping a spot from last year due to negative comments of customer service that overall really high marks thanks in part to the shower and spa. imagine. number two, air new zealand. being able to bid for an upgrade a week before you fly and they have a couple class. three seats that can convert to a bed. the number one bbst airline in the world, and a poor airlines. they have been number one for 17 years in a row. flight attendants famous for their above and beyond approach. including a bedtime turn down service for first-class suites featuring 23-inch tvs. the u.s., believe it or not

virgin and jetblue are the only two to make the top 20. if only i could tell you about my experiences on virgin airlines. i cannot even imagine they would be on any list. still to come, that time of year again. timtime to start thinking about your money in 2013. the best year and many moves you may not even know about. we will be right back.

tracy: coming up next, we're covering your assets with the best many moves with or without the fiscal cliff in two minutes.

tracy: whether congress and the president and rigid fiscal cliff deal before january 1 remains up in the air. here with the tips, managing director of wealth held financial planning. i think it is an important point for people to understand what the fiscal cliff aside, you have a year-end tax plan. >> there is a usual thing you should still be doing every year. with the rates going up, like a grown-up, there are more valuable than if you don't use them this year. tracy: many people wanting to save their gains, take the losses. >> everybody talks about taking again now, buying back, hire you don't want to accelerate10

texas unless you know you're going to sell those anyway. soon into 2013. if you have a concentrated position is a lot of risk to get out. the next six to 10 months, accelerate. in a long-term investment, there's no reason i don't think accelerate the games to pay uncle sam early. tracy: if you are in a position is a short-term gain, would you buy it back in their retirement accounts like iras? >> it depends if there's going to be gain potentials, still lower than the rate. tracy: that is really important as tax rates go up. speak of the thing is the fiscal cliff is driving people to get a little crazy but reality is the argument is over the highest

bracket. for most people it shouldn't matter that much. however do have a payroll tax increase likely by 2% for those making over 200,000 single or 250 joint will have the extra .9%. prop 30 increases, it is always a good year to look at bb holdings. is he a particular with all the moving parts. tracy: what about if they are you have to pass a patch. you assume based on history? >> it is one of those things you have to wait and see. that is the one thing that is like a silent killer. it could hit a lot greater extent. tracy: as awful as it sounds, hire a veteran. >> absolutely.

up to $9600 per worker. the panel at the wage is going to be, $9600 to hire a veteran, for looking to hire people the next couple of months, accelerate that, put people to work and get a great tax credit. tracy: thank you very much. >> you're welcome. tracy: will be right back with my two cents more and the answer to the day. she passengers be allowed to use their cell phone on a flight? what do you think? with scottrader streaming quotes, any way youant. fully customize i for your trading process -- from thought to ade, on every scree and all in real me. which makes it just li having your own trading floor, right at your fiertips. [ dger ] at scottrade, seven dollar trades are just the stt. try our easy-to-use scottrader streaming quotes.

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tracy: okay, so there are new reports from the fcc that shows cell phone use may soon be allowed on flights, but should passengers be allowed to use cell phones on flights in reality? here's what some of you are tweeting the show. gavin writes: no. it's bad enough listening to them scream into their cell phones on restaurants.

that's kind of mean though. robert says: if it it can be shn with data that it will not interfere with a flight's electronics, then, yes. where have you been? my phone's been on for a multitude of flights. 30% said, yes, 70% said no on gerri willis.com. be sure to log on for our online question every weekday. now here's some of your e-mails. jimmy asks: tracy: yeah. put the washington monument in there. bill says: